Anita Malhotra vs Apparel Export Promotion Counl.& Anr

Mrs. Anita Malhotra .... Appellant(s)

Versus

Apparel Export Promotion Council & Anr. .... Respondent(s)

J U D G M E N T

P. Sathasivam, J.

1) Leave granted.

2) This appeal is filed against the final judgment and order

dated 16.12.2009 passed by the High Court of Delhi at New

Delhi in Crl. Misc. Petition No. 1238 of 2007 wherein the

learned single Judge of the High Court dismissed the petition

filed by the appellant herein for quashing of Criminal

Complaint being No. 993/1 of 2005 filed against her under

Section 138 of the Negotiable Instruments Act, 1881

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(hereinafter referred to as "the Act") in the Court of ACMM,

New Delhi.

3) Brief facts:

(a) The appellant, who was a non-executive Director on the

Board of M/s Lapareil Exports (P) Ltd. (hereinafter referred to

as "the Company"), resigned from the Directorship w.e.f.

31.08.1998. On 20.11.1998, recording the resignation of the

appellant, the Company filed statutory Form 32 with the

Registrar of Companies. A notice dated 10.12.2004 was

issued to the appellant regarding dishonour of alleged cheques

under Section 138 of the Act by the respondents. The

appellant, vide letter dated 15.12.2004, replied to the said

notice informing the respondents that she had resigned from

the Directorship of the Company long back in 1998. By letter

dated 17.12.2004, the respondents sought for certain

information/documents from the appellant relating to the

Company. On 18.12.2004, the appellant replied to the

aforesaid letter reiterating that after her resignation she had

nothing to do with the Company and as such she was not in a

position to give the information sought for.

2 (b) The Respondents filed a complaint under Section 138 of

the Act being Complaint No. 993/1 of 2005 in the Court of

ACMM, New Delhi against the Company arraying the appellant

herein as accused No.3. The appellant herein also filed a

petition being Criminal Misc. (Main) Petition No. 1238 of 2007

before the High Court of Delhi for quashing of the complaint

pending in the Court of ACMM, New Delhi. The High Court, by

impugned judgment dated 16.12.2009, dismissed her petition.

(c) Aggrieved by the said judgment, the appellant has filed

this appeal by way of special leave before this Court.

4) Heard Mr. Akhil Sibal, learned counsel for the appellant

and Mr. G.L. Rawal, learned senior counsel for the respondent

No.1.

5) The only point for consideration in this appeal is whether

the appellant has made out a case for quashing the criminal

complaint filed by the respondents under Section 138 of the

Act.

6) In the complaint filed by the respondents before the

ACMM, New Delhi, the appellant herein was shown as A3.

Apparel Export Promotion Council-Complainant No.1 therein

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is a Company duly registered under Section 25 of the

Companies Act, 1956 and has been sponsored by the

Government of India through Ministry of Textiles and has been

looking after all the matters relating to export of readymade

garments from India to various parts of the world and also

administer Garments Export Policy (GEP) issued by the

Government of India from time to time. Complainant No.2 is

the Joint Director and is otherwise a Principal Officer in the

Apparel Export Promotion Council. Accused No.1 is a

Company incorporated under the Companies Act, 1956 and in

the complaint it was stated that accused Nos. 2 and 3 are its

Directors. Insofar as the role of A2 and A3 are concerned, it

was stated in the complaint that they are the Directors of the

Company and are responsible for the conduct of the business

and also responsible for day to day affairs of the Company. It

was further stated that all the accused persons, who were in

charge of and were responsible to the Company for the

conduct of its business at the time the offence was committed

shall be deemed to be guilty of the offence. It is further seen

from the complaint that on 01.06.2004, the Company had

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issued certain cheques in favour of the complainant for the

purpose of allocation of quota and revalidation and utilization

thereof. All the cheques mentioned in para 5 of the complaint

were sent for encashment but the same were

bounced/dishonoured by the drawee Bank, namely, the

Punjab & Sind Bank for the reason "funds insufficient". The

complaint further shows that the said fact was informed to the

accused. Thereafter, the complainant intended to take action

under Section 138 of the Act and the complainant got issued a

statutory notice dated 10.12.2004. It was specifically stated in

the complaint that the notices were sent by Regd. AD post on

15.12.2004 and through courier on 13.12.2004 which were

duly served on the accused.

7) Mr. Akhil Sibal, learned counsel for the appellant, by

drawing our attention to the reply sent by the appellant to the

aforesaid notice vide her letter dated 15.12.2004 informing the

complainant that she had resigned from the Directorship of

the Company long back in 1998, submitted that the

complainant having received such reply dated 15.12.2004

suppressed the same both in the complaint as well as before

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the courts below. In the said reply dated 15.12.2004, the

appellant has highlighted that she had resigned from the

Directorship of the Company long back in 1998. It is the

grievance of the appellant that in spite of specific assertion

that she ceased to be a Director from 1998 she was arrayed as

accused No.3 purportedly in her capacity as a Director of the

Company and her reply to the statutory notice was willfully

suppressed. When this aspect was confronted to Mr. G.L.

Rawal, learned senior counsel for the respondent, he fairly

admitted that the complaint does not refer to the reply dated

15.12.2004. He further stated that the said omission at the

instance of an undertaking of the Government of India has to

be ignored. We are unable to accept the said contention.

Inasmuch as the reply to the statutory notice contains specific

information that she had resigned from the Company in 1998,

the complainant was not justified in not referring the same in

the complaint and arrayed her as accused No.3 in the

complaint filed in the year 2005. No doubt, whether the

appellant has furnished the required documents in support of

her claim for resignation from the Company in 1998 is a

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different aspect which we are going to discuss in the

subsequent paras. The reading of the complaint proceeds that

on the date of issuance of cheques, that is, on 01.06.2004, the

appellant was a Director of the Company and in charge of all

the acts and deeds of the Company and also responsible for

the day to day affairs, funding monies etc. This assertion

cannot be sustained in the light of her reply dated 15.12.2004

intimating that she had resigned from the Company in 1998.

8) Mr. Akhil Sibal, learned counsel for the appellant, by

drawing our attention to a certified copy of Annual Return of

the Company dated 30.09.1999 filed with the Registrar of

Companies, which was placed on record before the High

Court, contended that it is a public document in terms of

Section 74(2) of the Indian Evidence Act, 1872 and the High

Court ought to have accepted the same as a valid document

and quashed the criminal proceedings insofar as the appellant

is concerned. The High Court, in the impugned order, after

recording the statement of counsel for the petitioner therein

(appellant herein) that Form-32 is not available in the record

of the Registrar of Companies and finding that Form-32 is the

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only authentic document and annual return dated 30.09.1999

filed by the accused-Company is not a public document

rejected the claim of the appellant and dismissed the petition

filed for quashing the complaint.

9) As regards the reference made by the High Court as to

the statement said to have been made by the counsel for the

petitioner therein that Form-32 is not available in the record of

the Registrar of Companies, learned counsel for the appellant

submitted that no such statement was ever made by the

counsel before the High Court and he placed on record copy of

Form-32 as Annexure-P2. A perusal of the document makes it

clear that with effect from 31.08.1998, the appellant Smt.

Anita Malhotra ceased to be a Director since she resigned from

the Directorship of the Company, i.e., Lapareil Exports (P) Ltd.

The High Court proceeded that Form-32 is the only authentic

document and in the absence of the same, reliance on Annual

Return is not permissible. The High Court has further held

that annual return is not a public document. It is the

assertion of the appellant that no such statement was ever

made or could have been made as the petition itself enclosed

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copies of Form 32 and the receipt of filing of the same.

Though the appellant (petitioner before the High Court) was

unable to produce certified copy of the said Form 32 as it was

not available with the ROC, copy of Form 32 was placed before

the High Court. In that event, we are of the view that the High

Court has ignored the fact that the appellant has placed on

record copy of Form 32 filed by the Company reporting the

cessation of Directorship of the appellant along with the

receipt of filing with the Registrar of Companies.

10) Mr. Akhil Sibal by taking us through the relevant

provisions of the Companies Act, 1956, particularly, Sections

159, 163 and 610(3) contended that the Annual Return dated

30.09.1999 is a public document and the same is reliable and

legally acceptable insofar as the contents of the same are

concerned. The said Sections are reproduced hereunder:

159. Annual return to be made by company having a

share capital.-- (1) Every company having a share capital

shall within sixty days from the day on which each of the

annual general meetings referred to in section 166 is held,

prepare and file with the Registrar a return containing the

particulars specified in Part I of Schedule V, as they stood on

that day, regarding--

(a) its registered office,

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(b) the register of its members,

(c) the register of its debenture-holders,

(d) its shares and debentures,

(e) its indebtedness,

(f) its members and debenture-holders, past and present,

and

(g) its directors, managing directors, managers and

secretaries, past and present:

Provided that any of the five immediately preceding returns

has given as at the date of the annual general meeting with

reference to which it was submitted, the full particulars

required as to past and present members and the shares

held and transferred by them, the return in question may

contain only such of the particulars as relate to persons

ceasing to be or becoming members since that date and to

shares transferred since that date or to changes as

compared with that date in the number of shares held by a

member.

Xxx xxxx"

163. Place of keeping and inspection of, registers and

returns.--

(1) The register of members commencing from the date of the

registration of the company, the index of members, the

register and index of debenture-holders, and copies of all

annual returns prepared under sections 159 and 160,

together with the copies of certificates and documents

required to be annexed thereto under sections 160 and 161,

shall be kept at the registered office of the company:

Xxx xxxx"

610. Inspection, production and evidence of documents

kept by Registrar.

Xxxx xxx

Xxxx xxx

(3) A copy of, or extract from, any document kept and

registered at any of the officers for the registration of

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companies under this Act, certified to be a true copy under

the hand of the Registrar (whose official position it shall not

be necessary to prove), shall, in all legal proceedings, be

admissible in evidence as of equal validity with the original

document."

11) A reading of the above provisions make it clear that there

is a statutory requirement under Section 159 of the

Companies Act that every Company having a share capital

shall have to file with the Registrar of Companies an annual

return which include details of the existing Directors. The

provisions of the Companies Act require annual return to be

made available by a company for inspection (S. 163) as well as

Section 610 which entitles any person to inspect documents

kept by the Registrar of Companies. The High Court

committed an error in ignoring Section 74 of the Indian

Evidence Act, 1872. Sub-section (1) of Section 74 refers to

public documents and sub-section (2) provides that public

documents include "public records kept in any State of private

documents". A conjoint reading of Sections 159, 163 and

610(3) of the Companies Act, 1956 read with sub-section (2) of

Section 74 of the Indian Evidence Act, 1872 make it clear that

a certified copy of annual return is a public document and the

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contrary conclusion arrived at by the High Court cannot be

sustained. Annual Return dated 30.09.1999 which provides

the details about the existing Directors clearly show that the

appellant was not a Director at the relevant time. Had the

High Court considered the contents of the certified copy of the

annual return dated 30.09.1999 filed by the Company which

clearly shows that the appellant herein (A3) has not been

shown as Director of the Company, it could have quashed the

criminal proceedings insofar as A3 is concerned.

12) In DCM Financial Services Limited vs. J.N. Sareen

and Another, (2008) 8 SCC 1, this Court, while considering

Sections 138 and 141 of the Act came to the following

conclusion which is relevant for our purpose:

"21. The cheque in question was admittedly a post-dated

one. It was signed on 3-4-1995. It was presented only

sometime in June 1998. In the meantime the first

respondent had resigned from the directorship of the

Company. The complaint petition was filed on or about 20-8-

1998. Intimation about his resignation was given to the

complainant in writing by the first respondent on several

occasions. The appellant was, therefore, aware thereof.

Despite having the knowledge, the first respondent was

impleaded as one of the accused in the complaint as a

Director in charge of the affairs of the Company on the date

of commission of the offence, which he was not. If he was

proceeded against as a signatory to the cheques, it should

have been disclosed before the learned Judge as also the

High Court so as to enable him to apply his mind in that

behalf. It was not done. Although, therefore, it may be that

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as an authorised signatory he will be deemed to be person

in-charge, in the facts and circumstances of the case, we are

of the opinion that the said contention should not be

permitted to be raised for the first time before us. A person

who had resigned with the knowledge of the complainant in

1996 could not be a person in charge of the Company in

1998 when the cheque was dishonoured. He had no say in

the matter of seeing that the cheque is honoured. He could

not ask the Company to pay the amount. He as a Director or

otherwise could not have been made responsible for payment

of the cheque on behalf of the Company or otherwise. [See

also Saroj Kumar Poddar v. State (NCT of Delhi), Everest

Advertising (P) Ltd. v. State, Govt. of NCT of Delhi and Raghu

Lakshminarayanan v. Fine Tubes."

13) In Harshendra Kumar D. vs. Rebatilata Koley and

Others, (2011) 3 SCC 351, while considering the very same

provisions coupled with the power of the High Court under

Section 482 of the Code of Criminal Procedure, 1973 (in short

`the Code') for quashing of the criminal proceedings, this Court

held:

"25. In our judgment, the above observations cannot be read

to mean that in a criminal case where trial is yet to take

place and the matter is at the stage of issuance of summons

or taking cognizance, materials relied upon by the accused

which are in the nature of public documents or the materials

which are beyond suspicion or doubt, in no circumstance,

can be looked into by the High Court in exercise of its

jurisdiction under Section 482 or for that matter in exercise

of revisional jurisdiction under Section 397 of the Code. It is

fairly settled now that while exercising inherent jurisdiction

under Section 482 or revisional jurisdiction under Section

397 of the Code in a case where complaint is sought to be

quashed, it is not proper for the High Court to consider the

defence of the accused or embark upon an enquiry in respect

of merits of the accusations. However, in an appropriate

case, if on the face of the documents -- which are beyond

suspicion or doubt -- placed by the accused, the accusations

against him cannot stand, it would be travesty of justice if

the accused is relegated to trial and he is asked to prove his

defence before the trial court. In such a matter, for

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promotion of justice or to prevent injustice or abuse of

process, the High Court may look into the materials which

have significant bearing on the matter at prima facie stage."

As rightly stated so, though it is not proper for the High Court

to consider the defence of the accused or conduct a roving

enquiry in respect of merit of the accusation, but if on the face

of the document which is beyond suspicion or doubt placed by

the accused and if it is considered the accusation against her

cannot stand, in such a matter, in order to prevent injustice or

abuse of process, it is incumbent on the High Court to look

into those document/documents which have a bearing on the

matter even at the initial stage and grant relief to the person

concerned by exercising jurisdiction under Section 482 of the

Code.

14) Inasmuch as the certified copy of the annual return

dated 30.09.1999 is a public document, more particularly, in

view of the provisions of the Companies Act, 1956 read with

Section 74(2) of the Indian Evidence Act, 1872, we hold that

the appellant has validly resigned from the Directorship of the

Company even in the year 1998 and she cannot be held

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responsible for the dishonour of the cheques issued in the

year 2004.

15) This Court has repeatedly held that in case of a Director,

complaint should specifically spell out how and in what

manner the Director was in charge of or was responsible to the

accused Company for conduct of its business and mere bald

statement that he or she was in charge of and was responsible

to the company for conduct of its business is not sufficient.

[Vide National Small Industries Corporation Limited vs.

Harmeet Singh Paintal and Another, (2010) 3 SCC 330]. In

the case on hand, particularly, in para 4 of the complaint,

except the mere bald and cursory statement with regard to the

appellant, the complainant has not specified her role in the

day to day affairs of the Company. We have verified the

averments as regard to the same and we agree with the

contention of Mr. Akhil Sibal that except reproduction of the

statutory requirements the complainant has not specified or

elaborated the role of the appellant in the day to day affairs of

the Company. On this ground also, the appellant is entitled to

succeed.

15 16) In the light of the above discussion and of the fact that

the appellant has established that she had resigned from the

Company as a Director in 1998, well before the relevant date,

namely, in the year 2004, when the cheques were issued, the

High Court, in the light of the acceptable materials such as

certified copy of annual return dated 30.09.1999 and Form 32

ought to have exercised its jurisdiction under Section 482 and

quashed the criminal proceedings. We are unable to accept

the reasoning of the High Court and we are satisfied that the

appellant has made out a case for quashing the criminal

proceedings. Consequently, the criminal complaint No. 993/1

of 2005 on the file of ACMM, New Delhi, insofar as the

appellant herein (A3) is quashed and the appeal is allowed.

...........................................

......J.

(P. SATHASIVAM)

..................................................J.

(JASTI CHELAMESWAR)

NEW DELHI;

NOVEMBER 8, 2011.

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